Unlike lay-by, where you get the item after paying, BNPL lets you take the item now and pay later, making it a form of credit that can affect home loan applications.
While BNPL can help manage cash flow if used carefully, many don’t see it as debt.
Small repayments, like $25 or $50, may seem harmless but still count when lenders assess borrowing capacity. Lenders consider your income, taxes, expenses, dependents and debts.
Regular BNPL payments can reduce the money available for a mortgage.
A few BNPL accounts might seem minor, but they can raise questions for lenders about repayment habits, usage and missed payments, which can affect the strength of an application.
For first-home buyers, this is crucial. High property prices and saving challenges mean losing borrowing capacity to avoidable short-term credit can be frustrating, especially if they’re unaware of its impact.
The biggest mistake is thinking BNPL doesn’t matter. Its repayments appear on bank statements and influence borrowing decisions.
Review your BNPL use early: Pay off balances, close unused accounts, make all repayments on time, and scrutinise bank statements for control versus pressure.
While BNPL is convenient and accepted, it’s a commitment to repay later, which can impact your ability to buy a home more than you think.
The key message: Treat BNPL as credit before the bank does. Small purchases split into multiple payments may not seem like a problem, but for maximising borrowing capacity, every repayment counts — every penny matters.
– Sean Carter, Aussie.
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